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Pricing Supplement dated November 18, 1994 Rule 424(b)(3)
(To Prospectus dated November 8, 1993 and File No. 33-50883
Prospectus Supplement dated December 3, 1993)
ADVANTA CORP.
Medium-Term Notes, Series A - Floating Rate
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<S> <C>
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Principal Amount: $50,000,000 Initial Interest Rate: To be determined on 11/29/94
Agent's Discount or Commission: $125,000 Stated Maturity Date: 11/29/96
Net Proceeds to Issuer: $49,875,000 Original Issue Date: 11/29/94
Issue Price: 100% Trade Date: 11/18/94
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Calculation Agent: The Chase Manhattan Bank Cusip No.: 00756QAY4
(National Association)
Interest Calculation:
/X / Regular Floating Rate Note / / Floating Rate/Fixed Rate Note
(Fixed Rate Commencement Date):
/ / Inverse Floating Rate Note (Fixed Interest Date):
(Fixed Interest Rate):
/ / Other Floating Rate Note (see attached)
Interest Rate Basis:
/ / CD Rate / / Commercial Paper Rate
/ / Eleventh District Cost of Funds Rate / X/ Federal Funds Rate
/ / LIBOR Index Currency:
/ / LIBOR Reuters / / Treasury Rate
/ / LIBOR Telerate / / Other (see attached)
Initial Interest Reset Date: 11/30/94 Spread (+/-): +48
Interest Reset Dates: Daily Spread Multiplier: N/A
Interest Payment Dates: On the 29th day of each calendar Maximum Interest Rate: N/A
month, unless such day is not a Business Day in which Minimum Interest Rate: N/A
case the Interest Payment Date will be the next
succeeding Business Day of that month except that if
such next succeeding Business Day falls in the next
succeeding calendar month, the Interest Payment Date
will be the immediately preceding Business Day.
Index Maturity: Daily
Day Count Convention:
/ / 30/360 for the period from to
/X / Actual/360 for the period from 11/29/94 to 11/29/96
/ / Actual/Actual for the period from to
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Redemption:
/X / The Notes cannot be redeemed prior to the Stated Maturity Date.
/ / The Notes may be redeemed prior to the Stated Maturity Date.
Initial Redemption Date:
Initial Redemption Percentage: _____%
Annual Redemption Percentage Reduction: ____% until
Redemption
Percentage is 100% of the principal amount.
Repayment:
/X / The Notes cannot be repaid prior to the Stated Maturity Date.
/ / The Notes can be repaid prior to the Stated Maturity Date at
the option of the holder of the Notes.
Optional Repayment Date(s):
Repayment Price: ________%
Currency:
Specified Currency: U.S. dollars
(If other than U.S. dollars, see attached)
Minimum Denominations:
(Applicable only if Specified Currency is other than U.S. dollars)
Original Issue Discount:
/ / Yes / X/ No
Total Amount of OID:
Yield to Maturity:
Initial Accrual Period:
Form:
/X / Book Entry / / Certificated
Agent acting in the capacity as indicated below:
/ X/ Agent / / Principal
If as Principal:
/ / The Notes are being offered at varying prices related to
prevailing market prices at the time of resale.
/ / The Notes are being offered at a fixed initial public offering
price of _____% of principal amount.
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If as Agent:
The Notes are being offered at a fixed initial public offering price
of 100% of principal amount.
/X / Other Provisions: see attached
-------------------------------------
/ / Merrill Lynch & Co.
/X / CS First Boston
/ / Salomon Brothers Inc
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The following discussion supplements and, to the extent inconsistent
with, replaces the discussion contained in the accompanying Prospectus
Supplement under the heading "United States Taxation--Tax Consequences to
United States Holders--Original Issue Discount Notes".
On January 27, 1994, the Internal Revenue Service ("IRS") issued final
Treasury regulations (the "OID Regulations") under the original issue discount
provisions of the Code. The OID Regulations, which replaced certain proposed
original issue discount regulations that were issued on December 21, 1992,
generally apply to debt instruments issued on or after April 4, 1994. In
addition, taxpayers may rely on the OID Regulations for debt instruments issued
after December 21, 1992.
Under the OID Regulations, the issue price of an issue of Notes equals
the first price at which a substantial amount of such Notes has been sold. The
stated redemption price at maturity of a Note is the sum of all payments
provided by the Note other than "qualified stated interest" payments. The term
"qualified stated interest" generally means stated interest that is
unconditionally payable in cash or property (other than debt instruments of the
issuer) at least annually at a single fixed rate. In addition, under the OID
Regulations, if a Note bears interest for one or more accrual periods at a rate
below the rate applicable for the remaining term of such Note (e.g., Notes with
teaser rates or interest holidays), and if the greater of either the resulting
foregoing interest on such Note or any "true" discount on such Note (i.e., the
excess of Note s stated principal amount over its issue price) equals or
exceeds a specified de minimis amount, then the stated interest on the Note
would be treated as original issue discount rather than qualified stated
interest.
Under the OID Regulations, Floating Rate Notes and Indexed Notes
("Variable Notes") are subject to special rules whereby a Variable Note will
qualify as a "variable rate debt instrument" if (a) its issue price does not
exceed the total noncontingent principal payments due under the Variable Note
by more than a specified de minimis amount and (b) it provides for stated
interest, paid or compounded at least annually, at current values of (i) one or
more qualified floating rates, (ii) a single fixed rate and one or more
qualified floating rates, (iii) a single objective rate, or (iv) a single fixed
rate and a single objective rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in
the value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than zero but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates than
can reasonably be expected to have
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approximately the same values throughout the term of the Variable Note (e.g.,
two or more qualified floating rates with values within 25 basis points of each
other as determined on the Variable Note s issue date) will be treated as a
single qualified floating rate. Notwithstanding the foregoing, a variable rate
that would otherwise constitute a qualified floating rate but which is subject
to one or more restrictions such as a maximum numerical limitation (i.e., a
cap) or a minimum numerical limitation (i.e., a floor) may, under certain
circumstances, fail to be treated as a qualified floating rate under the OID
Regulations. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single fixed formula and which is
based upon (i) one or more qualified floating rates, (ii) one or more rates
where each rate would be a qualified floating rate for a debt instrument
denominated in a currency other than the currency in which the Variable Note is
denominated, (iii) either the yield or changes in the price of one or more
items of actively traded personal properly, or (iv) a combination of objective
rates. The OID Regulations also provide that other variable interest rates may
be treated as objective rates if so designated by the IRS in the future.
Despite the foregoing, a variable rate of interest on a Variable Note will not
constitute an objective rate if it is reasonably expected that the average
value of such rate during the first half of the Variable Note s term will be
either significantly less than or significantly greater than the average value
of the rate during the final half of the Variable Note s term. A "qualified
inverse floating rate" is any objective rate where such rate is equal to a
fixed rate minus a qualified floating rate, as long as variations in the rate
can reasonably be expected to inversely reflect contemporaneous variations in
the cost of newly borrowed funds. The OID Regulations also provide that if a
Variable Note provides for stated interest at a fixed rate for an initial
period of less than one year followed by a variable rate that is either a
qualified floating rate or an objective rate and if the variable rate on the
Variable Note s issue date is intended to approximate the fixed rate (e.g., the
value of the variable rate on the issue date does not differ from the value of
the fixed rate by more than 25 basis points), then the fixed rate and the
variable rate together will constitute either a single qualified floating rate
or objective rate, as the case may be.
If a Variable Note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such Note which is unconditionally
payable in cash or property (other than debt instruments of the issuer) at
least annually will constitute qualified stated interest and will be taxed
accordingly. Thus, a Variable Note that provides for stated interest at either
a single qualified floating rate or a single objective rate throughout the term
thereof and that qualifies as a "variable rate debt instrument" under the OID
Regulations will generally not be treated as having been issued with original
issue discount unless the Variable Note is issued at a "true" discount (i.e.,
at a price below the Note s stated principal amount) in excess of a specified
de minimis amount. Original issue discount on such a Variable Note arising
from "true" discount is allocated to an accrual period using the constant yield
method described above.
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In general, any other Variable Note that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of original issue
discount and qualified stated interest on the Variable Note. The OID
Regulations generally require that such a Variable Note be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of the
Variable Note with a fixed rate equal to the value or the qualified floating
rate or qualified inverse floating rate, as the case may be, as of the Variable
Note s issue date. Any objective rate (other than a qualified inverse floating
rate) provided for under the terms of the Variable Note is converted into a
fixed rate that reflects the yield that is reasonably expected for the Variable
Note. In the case of a Variable Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at affixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or
a qualified inverse floating rate, if the Variable Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Variable Note as of the Variable
Note s issue date is approximately the same as the fair market value of an
otherwise identical debt instrument that provides for either the qualified
floating rate or qualified inverse floating rate rather than the fixed rate.
Subsequent to converting the fixed rate into either a qualified floating rate
or a qualified inverse floating rate, the Variable Note is then converted into
an "equivalent" fixed rate debt instrument in the manner described above.
Once the Variable Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a United
States Holder of the Variable Note will account for such original issue
discount and qualified stated interest as if the United States Holder held the
"equivalent" fixed rate debt instrument. Each accrual period appropriate
adjustments will be made to the amount of qualified stated interest or original
issue discount assumed to have been accrued or paid with respect to the
"equivalent" fixed rate debt instrument in the event that such amounts differ
from the actual amount of interest accrued or paid on the Variable Note during
the accrual period.
If a Variable Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Variable Note would be treated
as a contingent payment debt obligation. It is not entirely clear under
current law how a Variable note would be taxed if such Note were treated as a
contingent payment debt obligation. The proper United Stated Federal income
tax treatment of Variable Notes that are treated as contingent payment debt
obligations will be more fully described in the applicable Pricing Supplement.
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Certain of the Notes (i) may be redeemable at the option of the
Company prior to their stated maturity (a "call option") and/or (ii) may be
repayable at the option of the holder prior to their stated maturity (a "put
option"). Notes containing such features may be subject to rules that differ
from the general rules discussed above. Investors intending to purchase Notes
with such features should consult their own tax advisors, since the original
issue discount consequences will depend, in part, on the particular terms and
features of the purchased Notes.
United States Holders may generally, upon election, include in income
all interest (including stated interest, acquisition discount, original issue
discount, de minimis original issue discount, market discount, de minimis
market discount, and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium) that accrues on a debt instrument by using the
constant yield method applicable to original issue discount, subject to certain
limitations and exceptions. This election is only available for debt
instruments issued on or after April 4, 1994.
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